Fuqua Company’s sales budget projects unit sales of part 198Z of 10,300 units in
ID: 2470951 • Letter: F
Question
Fuqua Company’s sales budget projects unit sales of part 198Z of 10,300 units in January, 12,600 units in February, and 13,200 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $3 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2013.
Prepare a production budget for January and Feburary 2014?
Prepare a direct materials budget for January 2014.
Explanation / Answer
Answer
Answer 1
Production budget
Figures in $
Particulars
January
February
March
Budgeted Sales (units)
A
10300
12600
13200
Ending finished goods inventory
B
2520
2640
20% of the next month’s expected unit sales
12600*0.2
13200*0.2
Total units available for sale (A+B)
C
12820
15240
Opening finished inventory
D
2060
2520
10300*0.2
12600*0.2
Required Production (C-D)
10760
12720
Answer 2
Direct Material budget
Figures in $
Particulars
January
February
Required Production (as per above table)
a
10760
12720
Required materials per unit (in pounds)
b
3
3
Total required materials for production (a*b)
c
32280
38160
Ending raw material inventory
d
15264
40% of the next month’s production requirements
38160*0.4
Total raw material required (c+d)
e
47544
Opening raw material stock
f
12912
32280*0.4
Required raw material purchase in pounds (e-f)
g
34632
Raw material price per pound
h
3
Raw material purchase in $ (g*h)
103896
Production budget
Figures in $
Particulars
January
February
March
Budgeted Sales (units)
A
10300
12600
13200
Ending finished goods inventory
B
2520
2640
20% of the next month’s expected unit sales
12600*0.2
13200*0.2
Total units available for sale (A+B)
C
12820
15240
Opening finished inventory
D
2060
2520
10300*0.2
12600*0.2
Required Production (C-D)
10760
12720
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.